Guidance Resource: Artificial intelligence and discrimination in insurance pricing and underwriting(2022)

Foreword

When approached by the Actuaries Institute (the Institute), the Australian Human Rights Commission (the Commission) welcomed this opportunity to partner with them on the development of this Guidance Resource on artificial intelligence (AI) and discrimination in insurance pricing and underwriting (the Guidance Resource).

AI promises faster and smarter decision making. However, the use of AI carries with it certain risks, including the risk of discrimination. At the federal level, unlawful discrimination is prohibited by the Age Discrimination Act 2004 (Cth), Disability Discrimination Act 1992 (Cth), Racial Discrimination Act 1975 (Cth), and Sex Discrimination Act 1984 (Cth) (together, the Discrimination Acts). Yet there is recognition in most of these acts that discrimination by insurers will not be unlawful in certain circumstances; broadly when it is reasonable and based on actuarial or statistical data.

Data and modelling are at the heart of many decisions made by insurers. The Discrimination Acts apply to such decisions whether or not they are made using AI. Nonetheless, the Commission has heard concerns from the community regarding the uncertainty of how the Discrimination Acts apply to the use of AI in this context.

The Guidance Resource provides information on the Discrimination Acts, the risks of discrimination arising from the use of AI, and how to mitigate against these risks. It provides practical guidance for insurers on complying with the Discrimination Acts when using AI for insurance pricing and underwriting.

On behalf of the Commission, I thank the Institute for their valued contributions to this work. I also thank the Institute members and insurance industry representatives for the advice and feedback they provided during our consultation process.

I look forward to insurers using this Guidance Resource to assist them in complying with the Discrimination Acts when making pricing and underwriting decisions using AI, and in delivering fairer outcomes for their customers.

Lorraine Finlay
Human Rights Commissioner